New Delhi, January 6: India’s automobile retail industry ended 2025 on a firm footing, recording healthy growth across most segments despite a subdued start to the year.
According to data released by the Federation of Automobile Dealers Associations (FADA), total vehicle retail sales in 2025 stood at 28.16 million units, marking a 7.71 per cent year-on-year increase.
Second-half turnaround lifts annual performance
The performance reflected a clear turnaround in the latter half of the year, supported by policy measures, improving affordability and strengthening consumer sentiment.
FADA described 2025 as a “two-half year.” While the January–August period remained muted due to cautious consumer spending and selective financing approvals, the scenario changed sharply from September onwards.
GST 2.0 fuels demand revival
The implementation of GST 2.0 rate rationalisation, which reduced tax incidence on mass-market vehicles such as small cars, two-wheelers, three-wheelers and select commercial vehicles, played a pivotal role in reviving demand. This, according to FADA, led to a sustained upshift in retail activity through the September–December period.
Broad-based growth across segments
Category-wise performance remained broad-based. Two-wheelers, the largest segment, grew 7.24 per cent to over 20.29 million units, while passenger vehicles (PVs) posted a stronger 9.70 per cent growth, reaching 4.47 million units. Commercial vehicles (CVs) expanded by 6.71 per cent, tractors by 11.52 per cent, and three-wheelers by 7.21 per cent.
Construction equipment lags
Construction equipment was the only laggard, declining 6.67 per cent year-on-year, reflecting slower infrastructure equipment replacement cycles.
Rural markets outperform urban centres
A key highlight of 2025 was the outperformance of rural markets, particularly in passenger vehicles. Rural PV sales rose 12.31 per cent, significantly outpacing 8.08 per cent growth in urban areas, underscoring the widening footprint of personal mobility beyond major cities. Overall, urban auto retail grew 8.20 per cent, while rural markets recorded 7.31 per cent growth, indicating balanced participation across geographies.
Electric and CNG vehicles gain traction
The year 2025 also strengthened India’s mobility transition story. Electric vehicles (EVs) continued to gain traction, especially in the three-wheeler segment where EVs accounted for over 60 per cent of total retail in 2025. EV penetration in two-wheelers rose to 6.31 per cent, while passenger vehicle EV share reached nearly 4 per cent. At the same time, CNG emerged as a strong alternative fuel, particularly in PVs (21.3 per cent share) and CVs (11.81 per cent).
Strong finish in December
December 2025 provided a strong year-end finish, with auto retail sales rising 14.63 per cent year-on-year to 2.03 million units. Passenger vehicles led the surge with a robust 26.64 per cent growth, followed by commercial vehicles at 24.60 per cent and three-wheelers at 36.10 per cent.
Inventory levels improve
Rural PV demand remained particularly strong in December, growing 32.40 per cent, compared to 22.93 per cent growth in urban markets. Dealers also benefited from year-end offers and pre-buying ahead of anticipated price hikes in January. Inventory levels improved during the month, with PV stock coming down to around 37–39 days, nearly a week lower than the previous month.
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Dealer outlook remains optimistic
Looking ahead, dealer sentiment remains optimistic. FADA’s survey shows over 70 per cent of dealers expect growth in January 2026, while nearly 75 per cent anticipate expansion over the next three months, supported by the marriage season, festival demand, rural cash flow improvement and easier monetary conditions following the RBI’s repo rate cut in December.
(Disclaimer: Except for the headline, this article has not been edited by FPJ's editorial team and is auto-generated from an agency feed.)
